Shares of Select Medical Holdings Corporation (SEM Quick QuoteSEM - Free Report) have fallen 17.6% since it reported first-quarter 2025 results on May 1. The quarterly results were hurt by the reduced occupancy rate in the Rehabilitation Hospital segment and lower admissions in the Critical Illness Recovery Hospital segment, coupled with higher costs and expenses. However, the negatives were partially offset by improved revenue per patient day in the Rehabilitation hospital segment and occupancy rates in the Critical Illness Recovery Hospital. 

Select Medical reported first-quarter 2025 adjusted earnings per share (EPS) of 44 cents, which missed the Zacks Consensus Estimate of 45 cents. However, the bottom line increased from 33 cents a year ago. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Net operating revenues amounted to $1.35 billion, which rose 2.4% from a year ago. The metric missed the consensus mark by 0.8%.

Select Medical’s Q1 Performance

Total costs and expenses increased 3% year over year to $1.2 billion, in line with our estimate of $1.2 billion. The increase was due to escalating costs of services, exclusive of depreciation and amortization.

Adjusted EBITDA of $151.4 million declined from $165.8 million in the prior-year quarter and missed our estimate of $162.9 million.

Select Medical’s Segmental Update

Critical Illness Recovery Hospital

The segment's revenues amounted to $637 million, which decreased 2.9% year over year also missed the consensus mark of $667 million. The unit weakened from a 1.8% year-over-year decrease in revenue per patient day. Patient days declined 1.1%, while admissions dropped 1.9% year over year. The occupancy rate, however, improved 200 basis points (bps) year over year.

Adjusted EBITDA of $86.6 million declined 25.3% year over year and also missed the Zacks Consensus Estimate and our estimate of $109.1 million. The adjusted EBITDA margin deteriorated 410 bps year over year to 13.6%.

Rehabilitation Hospital

The segment’s revenues improved 15.7% year over year to $307.4 million. The figure outpaced the consensus mark of $292.1 million. Year-over-year increases of 6.9% and 5.1%, respectively, in admissions and patient days contributed to the unit’s strong performance.

Adjusted EBITDA of $70.4 million rose 14.7% year over year and beat the Zacks Consensus Estimate of $59.9 million. However, the adjusted EBITDA margin deteriorated 20 bps year over year to 22.9%.

Outpatient Rehabilitation

Revenues amounted to $307.3 million in the segment, which grew 1.4% year over year and beat the consensus mark of $303.8 million. Revenue per patient visit rose 3% year over year.

Adjusted EBITDA of $24.3 million decreased 2.6% year over year and missed the Zacks Consensus Estimate of $26.8 million. The adjusted EBITDA margin deteriorated 30 bps year over year to 7.9%.

Select Medical’s Financial Position (as of March 31, 2025)

Select Medical exited the first quarter with cash and cash equivalents of $53.2 million, which declined from $59.7 million at 2024-end.

Total assets of $5.7 billion rose from $5.6 billion at 2024-end.

Long-term debt, net of the current portion, amounted to $1.8 billion, down from $1.7 billion at 2024-end.

Total equity of $2 billion rose 2.5% from the 2024-end level.

Select Medical used net cash in operations of $3.5 million in the reported quarter, which improved from $66.7 million a year ago.

Select Medical’s Share Repurchase & Dividend Update

Select Medical bought back shares worth $11.4 million in the first quarter of 2025.

From the inception of the common stock repurchase program through March 31, 2025, Select Medical has repurchased shares worth approximately $611.7 million. 

On April 30, 2025, management approved a cash dividend of 6.25 cents per share, which will be paid out on May 29 to shareholders of record as of May 15.

Select Medical’s 2025 Outlook Reaffirmed

Management currently anticipates revenues to be between $5.3 billion and $5.5 billion, lower than the earlier estimated range of $5.4 billion-$5.6 billion.

Management expects adjusted EBITDA to be between $510 million and $530 million, below the earlier estimated range of $520 million-$540 million.

EPS is still expected to be between $1.09 and $1.19.

SEM’s Zacks Rank & Key Picks

SEM currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are Aveanna Healthcare Holdings Inc. (AVAH Quick QuoteAVAH - Free Report) , BrightSpring Health Services, Inc. (BTSG Quick QuoteBTSG - Free Report) and GeneDx Holdings Corp (WGS Quick QuoteWGS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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The Zacks Consensus Estimate for BrightSpring Health Services’ current-year earnings is pegged at 82 cents per share. BrightSpring Health Services has witnessed two upward revisions in the past seven days against none in the opposite direction. The consensus estimate for current-year revenues is pegged at $12.1 billion, implying 7.1% year-over-year growth.

The Zacks Consensus Estimate for GeneDx Holdings’ current-year earnings of $1.09 per share has witnessed one upward revision in the past seven days against no movement in the opposite direction. GeneDx Holdings beat earnings estimates in each of the trailing four quarters, with the average surprise being 145.8%. The consensus estimate for current-year revenues is pegged at $374.1 billion, calling for 22.5% year-over-year growth.